Wheat to Citrus Threatened by U.S. Cold as Cattle Climb

Freezing weather across the U.S. will
damage crops from winter wheat to oranges and is threatening
livestock, sending cattle futures to an all-time high.

As much as 15 percent of winter-wheat plants in the Great
Plains face damage, Kyle Tapley, a senior agricultural
meteorologist at MDA Weather Services in Gaithersburg, Maryland,
said in a telephone interview. The potential for frost will
increase in Florida today as temperatures drop to the upper 20s
Fahrenheit, damaging citrus groves, he said. Livestock slaughter
will slow because it’s harder to transport animals in the cold
and snow, and cattle will have trouble gaining weight, according
to commodity broker Allendale Inc.

The coldest air in almost 20 years is sweeping over the
central U.S. toward the East Coast, threatening to topple
temperature records and ignite energy demand. Hard-freeze
warnings and watches, which are alerts for farmers, stretch from
Texas to central Florida, and 90 percent of the contiguous U.S.
will be at or below the freezing mark, according to the U.S.
Weather Prediction Center in College Park, Maryland. Wheat
futures traded near the highest level in two weeks today.

“There’s some concern over what the cold can do to damage
the crops,” Jack Scoville, the vice president of Price Futures
Group, said in a telephone interview from Chicago. “Extreme
cold has made logistics a huge problem, and there’s some risk in
loss of production in both wheat and oranges. The cows and hogs
are going to need a whole lot of feed to keep warm.”

Wheat futures on the Chicago Board of Trade climbed as much
as 1.2 percent yesterday to $6.1275 a bushel, the highest since
Dec. 23, before trading at $6.0825 today.

“The market is rising on speculation we will see some
yield losses that will tighten up U.S. supplies,” Chad Henderson, the president of Prime Agricultural Consultants Inc.
in Brookfield, Wisconsin, said in a telephone interview. “We
haven’t seen these types of temperatures in 20 years, and the
market is uncertain of the eventual impact on yields.”

Most wheat in the southern Great Plains and Midwest has
about 1 inch (2.5 centimeters) of snow cover that can help to
protect the dormant crops, Tapley of MDA said. About 62 percent
of the plants were in good or excellent condition at the end of
November, according to the U.S. Department of Agriculture.

Citrus Plants

Cattle prices climbed 1.8 percent in 2013, the fifth
straight annual gain and the longest rally since 1964. Beef
output in the U.S., the biggest producer, may slump 5.7 percent
this year to the lowest since 1993, the USDA has projected.

“The sort of weather is always an issue for livestock,”
Sterling Smith, a futures specialist at Citigroup Inc. in
Chicago, said in a telephone interview. “You can’t move hogs in
weather like this. They will freeze.”

Frost may hurt as much as 15 percent of citrus plants in
Florida, the world’s biggest producer after Brazil, MDA’s Tapley
forecasts. Orange-juice futures in New York jumped 19 percent in
2013 as a crop disease threatened U.S. production. For there to
be “material” damage to groves, the temperature will need to
stay below 28 degrees Fahrenheit (-2.2 Celsius) for four hours,
Citigroup’s Smith said.

“If you only touch 28 degrees and move back up in the 30s
relatively quickly, the amount of damage is going to be
comparatively limited,” said Smith. “There is the potential
for damage, because cold weather is not necessarily easy to
predict.”